The Network Society and Organizational Change

Your trilogy is on the network society. Help us understand the defining features of that society and how it's different from what came before.

Well, as you well said before, in fact, my trilogy is on the interaction between the network society and the power of identity and social movements. It's that interaction which, I think, defines our world. So in that sense, my trilogy is one, two, three: The Network Society is the new techno-economic system; The Power of Identity is the key -- the salient trend, in terms of social movements and politics, adapting, resisting, counteracting the network society; and then the result of these two elements expresses itself in the macro transformations of the world, which I described in the third volume, End of Millennium.

The network society itself is, in fact, the social structure which is characteristic of what people had been calling for years the information society or post-industrial society. Both "post-industrial society" and "information society" are descriptive terms that do not provide the substance, that are not analytical enough. So it's not a matter of changing words; it's providing substance. And the definition, if you wish, in concrete terms of a network society is a society where the key social structures and activities are organized around electronically processed information networks. So it's not just about networks or social networks, because social networks have been very old forms of social organization. It's about social networks which process and manage information and are using micro-electronic based technologies.

And when that happens -- when this new structure comes into play -- the capacity of the society to process information and to learn has extraordinary consequences, does it not?

Absolutely. Because, let's take an example. The global economy: the global economy is not the same thing as the world economy of a highly internationalized economy. It's not. Because the global economy is based on the ability of the core activities -- meaning money, capital markets, production systems, management systems, information -- to work as a unit in real time on a planetary scale. Meaning that, at this point, we can process, and we do, billions and billions of dollars in seconds. And that can change from values to values, from markets to markets, from currencies to currencies, which increases the complexity, the size, and, ultimately, the volatility of global financial markets around the world. Which makes, in fact, impossible any kind of autonomy of financial markets in one country or one place vis-à-vis what's happening in the global system; which, therefore, makes extremely difficult any kind of monetary and budget policy which does not take into consideration the global financial market.

These changes -- economic policy, economic autonomy of governments, and, ultimately, the relationship between the governments and the economy -- are only possible because of deregulation and liberalization that took place in the 1980s in most countries, and because of the existence of an infrastructure of telecommunications, information systems, and fast transportation systems that provide the technological capacity for the system to work as a unit on a global scale.

One of the institutions that's in the path of this phenomenon is the state.

Absolutely.

What does it discover? That, in essence, it's losing control of some of its ability to manage its own economy, to ensure its own social welfare policies, and so on?

Absolutely. It doesn't mean that the states disappear, the nation state's not going to disappear. Let me just first say that. But the degrees of freedom of nation states have shrunk to an extraordinary degree in the last ten years. In some areas of the world, it has become explicit. Let's take the example of the European Union. Governments from the continent, the entire continent, decided to get together so that together they could have some level of bargaining power and some leverage to control global flows of wealth, information, and power. And they built a series of institutions which is not a federal state. It's still based on nation states, but also on supranational institutions which share sovereignty and also decentralize sovereignty to local region governments. These European states also subcontract sovereignty to international institutions, such as NATO, in terms of the armed forces.

So what we have, for instance, in the case of Europe, is a complex system of institutional relations, which I call the network state, because, in fact, it's a network of interactions of shared sovereignty. Under different forms, you have a similar situation in most of the world. In Latin America, some states are with others, but the main thing is that the key economic conditions are governed in connection with international institutions like the International Monetary Fund, through different trade treaties, MERCOSUR or the Andean Pact or the connection to the North American Free Trade Agreement [NAFTA]. So in other words, states operate, still exist, but operate as actors of a much more complex and interactive network.

Even in the case of the United States, few people think that the United States can act alone and impose conditions, both in military or economic terms. To start with, it's not the U.S. Government but the Federal Reserve Bank that has some kind of economic policy, but this economic policy is highly conditioned and shaped by the interaction with the global financial markets. Alan Greenspan does not control the global financial markets. He follows and creates conditions for the economy to perform better under the conditions or the constraints created by the global financial market.

We could say the same thing in technology networks, in flows of trade and flows of information. So the notion here is not the disappearance of the nation state; it's the transformation of a world based on sovereign nation states into a world of interdependence, of nation states sharing sovereignty.

So someone like Alan Greenspan is better positioned to respond to these global flows than someone in another state, for example?

I would say Alan Greenspan is an independent economic authority. In principle, after being appointed, he doesn't follow the instructions of the president or the instructions of the Congress. So in that sense, let's say, the International Monetary Fund is largely autonomous of a specific set of instructions. Alan Greenspan is largely autonomous. The European Central Bank is largely autonomous. So, ultimately, all these decision-makers in the world economic processes have to interact with the global financial markets; with the other decision-makers in these regulatory policies, too; and with their political institutional environment. It's a meta-network of all these networks.

The impact of this information technology is evident even in the conduct of war. It's fundamentally changing how states that need to go to war will go to war.

Definitely. On the one hand, because of the post - Vietnam War syndrome in the United States and post - Algerian War syndrome in Europe, public opinion in most developed countries -- I would say in all developed countries -- is against war. Not only in terms of general values of peace, but people simply don't believe that it's worthwhile to die or to have a fellow countryman dying for a vague, complicated, strategic geopolitical consideration. The Cold War, at least, justified for many people the notion that you had to sacrifice, because the other empire is going to get you. After the end of the Cold War, the dramatic threat posed by a North Korean invasion of the United States is not credible. The notion that Iraq was going to strangle the oil supply of the West, in fact, was halfway credible for a while and then disappeared. No one thinks that Iraq is really a threat for the Western world. At the most, it poses a threat as an element of the terrorist network that is part of the new geopolitics, but that is a different kind of war.

So because of that, the whole strategy has shifted to what I call the development of "instant wars" that are short enough and overwhelming enough to the adversary that public opinion doesn't even realize what's going on. I would say that part of the Gulf War was the beginning of this strategy. I say part, because it took months; but when it actually started, it was one hundred hours to finish. The Kosovo war against Yugoslavia was planned for three days. It just turned out differently.

But the notion here is that through technology, you target the key capabilities of your adversary, and you try to finish the war in a few hours or in a few days. And this is the kind of war we are moving to. On the one hand, technology allows it. On the other hand, public opinion will tolerate only this kind of war. There are dozens and dozens of dirty, slow, killing wars in the world -- the Sudan Civil War has resulted in two million people killed in the last twenty years. So this is another of the extraordinary disparities in the world. Through technology, the rich countries are able to do instant wars, while the poor countries go through machete wars for years and years.

One of the constraints on this war-fighting is the flow of information. It's not just that people no longer feel there are values worth dying for, but their ability to get information about what's happening on the battlefield is the kind of information flow that leaders who want to engage in war have to respond to, and are therefore forced to get out of the war quickly.

Absolutely. The most advanced thinking in this line of argument is in the Rand Corporation. They have detected the emergence of two kinds of major military political tactics. One is the emergence of what they call "no politics," as opposition to real politics; that is, the ability to work on information, values, perceptions in our society and also in societies in the world at large is much more important. This "no politics" is much more important because it builds the public and institutional support for the kind of wars that we proceed with. And the other, in terms of military tactics, is something that is interesting, namely, the development of what is called "swarming" as the key military tactic, which is being experimented with by all major branches of the armed forces in the United States. The marines, probably, are the most advanced in this thinking, which is based on the idea of splitting the traditional large units and creating a number of self-sufficient, highly powered autonomous units which form the networks that are assembled and disassembled according to specific needs and operations.

These units can become networks only on the basis of strong communication technology capabilities and direct access to information sources, which are organized in a computer network and then accessed through computer networking. (Not on the net, because that would be open code.) So the notion here is of moving from vertical bureaucracies and vertical organizations of large armies killing each other for centuries, to what we are now seeing emerging as small units with a high power of destruction based mainly on air power and naval supply, and at the same time, equipped essentially with information and communication. If you don't have your information and communication, you are blind and you are destroyed.

So what we're seeing in today's world is a meeting of technology with bureaucratic organizations that essentially have to change, if they're going to adapt to the problems that they confront.

Definitely. You see at this point the contradiction between the ability of networks to be more productive and more competitive, and the fact that most societies are still rooted in vertical organizations in a bureaucratic logic: "I am here, I am big. I can destroy you if you move because I'm bigger." It's interesting, in the Silicon Valley culture there is this saying, "It's not the bigger that wins, but the faster."

One of the legendary business tycoons in the world, Barnave, who is the leader of the major engineering company, BBM in Sweden, in one of the meetings we had last year said, "Well, my company is the largest engineering company in the world." They're building in Thailand, China, India, South Africa, etc. "We are predicated on the principle, which is complimentary to this, if you're the biggest and the fastest, then you win." But what he would not challenge is the notion that if you have to choose between size and resources, and agility and adaptability, there's no question that agility and adaptability wins.

This is simple to understand, but difficult to actually implement, because people who are currently in power in bureaucracies, in political organizations, in large corporations, in universities, are there because they have gone through the hierarchy, they have their clientele, they have their systems of support. All this has been pushed out by the out-competing logic of networks. And therefore, they will resist to the end. But by resisting, they bring the organizations down with themselves.

Now, it doesn't mean that networks, by definition, are wonderful. It can be networks of destruction. Networks don't have personal feelings. They kill or kiss. But the issue here is that first you start with a network which is equipped with information technology. That's the key. Then what the network does depends on the programming of the network, and this is of course a social and cultural process.